Jan. 23 (Bloomberg) -- Avianca Holdings SA dropped the most
since November after Venezuela devalued its currency for
airlines, eroding the value of new sales in the country.

American depositary receipts in the carrier, operator of
Venezuela’s third-biggest international airline by capacity,
tumbled 4.5 percent to $17.35 at the close of trading in New
York, the steepest one-day decline since Nov. 6. Copa Holdings
SA, the second-biggest, dropped 4.2 percent to $140.93.

Airlines, Venezuelans traveling abroad and foreigners
sending remittances home must use a secondary exchange rate
determined at weekly auctions, Economy Vice President Rafael
Ramirez said yesterday. The rate set at the latest auction was
11.36 bolivars per dollar, compared with the official rate of
6.3. Bogota-based Avianca has $270 million, or half of its cash
holdings, in the country, according to a third-quarter report.

“Any kind of headline like that from Venezuela creates a
little nervousness,” Rupert Stebbings, managing director of
equities and research at Bancolombia SA, said in a phone
interview from Medellin. “It’s too early to know what the
precise effect is. Venezuela needs international airlines to
work with them. It’s a delicate situation for both sides.”

Airlines have an equivalent of $3.3 billion in bolivars
measured at the official rate that they can’t expatriate because
of exchange controls, according to the International Air
Transport Association.

Avianca’s press office didn’t immediately reply to an e-mailed request for comment about the impact of the devaluation.
The carrier operates 124 monthly flights to the Venezuelan
cities of Caracas and Valencia, according to Colombian
regulators.

American Airlines Group Inc. is the biggest foreign airline
in Venezuela.

Tame, Copa

Gustavo Vargas, a spokesman for Panama City-based Copa,
said in an e-mailed response to questions that the company is
working closely with airline associations and the Venezuelan
government “to better understand the consequences of the new
regulations and, in particular, how we will function from now
on.”

Ecuador’s state-owned Tame Linea Aerea suspended
indefinitely all of its seven weekly flights from Caracas today
because of payment delays, the company said in a statement.

Since taking office in April, Venezuelan President Nicolas
Maduro has struggled to boost growth and rein in inflation in a
country with the world’s biggest oil reserves. Venezuela’s
international reserves fell to $20.5 billion this month from
more than $28 billion a year ago.